upgrade

Jake Paul-endorsed SafeMoon gets hacked after introducing a bug in upgrade

A public burn function introduced in the latest upgrade allegedly allows users to burn tokens from other addresses.

SafeMoon, a project previously endorsed by celebrities and social influencers like Jake Paul and Soulja Boy, announced its liquidity pool (LP) had been compromised. Without revealing further details about the attack, SafeMoon confirmed it is undertaking steps “to resolve the issue as soon as possible.”

Like many other crypto projects in 2021, SafeMoon was backed by numerous celebrities. However, a lawsuit from February 2022 alleged that musicians such as Nick Carter, Soulja Boy, Lil Yachty, and YouTubers Jake Paul and Ben Phillips mimicked real-life Ponzi schemes by misleading investors to purchase SafeMoon (SAFEMOON) tokens under the pretext of unrealistic profits.

Jake Paul promoting SafeMoon token in 2021. Source: Twitter

Investigating the SafeMoon hack shows that the attacker made away with approximately 27,000 BNB (BNB), worth $8.9 million. SafeMoon has not yet responded to Cointelegraph’s request for comment. Moreover, users have been barred from posting comments on the announcement that revealed the LP compromise.

Blockchain investigator PeckShield narrowed the problem to a recent software upgrade as a potential culprit that introduced the bug. A public burn function introduced in the latest upgrade allegedly allows users to burn tokens from other addresses.

Community member “DeFi Mark” explained that the attacker used the vulnerability to remove SafeMoon tokens, causing an artificial spike in the token’s price. The attacker took advantage of the situation and sold off the tokens at an inflated price.

SafeMoon exploit overview. Source: PeckShield

The attacker left a note along with the transaction, as shown above, which said:

“Hey relax, we are accidently frontrun an attack against you, we would like to return the fund, setup secure communication channel , lets talk.”

Until SafeMoon officially announces a resolution, investors are advised against investing in the project to avoid possible loss of funds.

Related: New crypto litigation tracker highlights 300 cases from SafeMoon to Pepe the Frog

Following a recent security incident related to illicit access to hot wallets, Bitcoin (BTC) ATM manufacturer General Bytes plans to reimburse customers that lost funds.

As Cointelegraph reported, the hack caused a loss of 56 BTC and 21.82 Ether (ETH), cumulatively worth nearly $1.9 million.

Magazine: Huawei NFTs, Toyota’s hackathon, North Korea vs. Blockchain: Asia Express

Coinbase expects high demand for ETH unstaking with Shanghai upgrade

Coinbase announces that unstaking requests may take weeks or months to process as they are not in charge of Ethereum’s unstaking process.

Ether (ETH) stakers who have had their holdings locked up during the Ethereum Merge event might soon have access to “unstaking.“

Coinbase has announced in a tweet that unstaking requests on its platform may take the protocol weeks or months to process. According to the tweet, it expects a flood of staking withdrawal requests after the update to the Ethereum network enables the functionality next month.

The Merge transitioned Ethereum from proof-of-work (PoW) to proof-of-stake (PoS) in September 2022, but stakers’ holdings remained locked up. This merger created a temporary situation where staking providers like Coinbase allow users to stake ETH on its platform — but not withdraw the funds.

Expected to take place in mid-April, Ethereum’s Shapella upgrade will enable users to withdraw their staked ETH. ETH holders can also stake more without being subject to an indefinite lockup period

Coinbase noted that staking requests are processed on-chain, and the firm will only act as a channel to pass unstaked ETH to customers once released by the protocol.

Coinbase explained, “Unstaking requests will open to all Coinbase customers at the same time and will be relayed to the Ethereum protocol and queued based on when they are received.”

Once the upgrade is finished, users will be able to make unstaking requests from their Coinbase accounts, which will become available after approximately 24 hours. However, customers should anticipate a considerable wait time after submitting the request.

Coinbase cannot give customers an exact timeframe for unstaking because they don’t have control over the process. They have given an estimate based on the time it takes for the Ethereum network to process transactions, but customers should be prepared to wait and be patient.

Related: Ethereum price reaches lowest level relative to Bitcoin in 5 months

To account for the inconvenience, Coinbase provides its users a liquid staking option called “cbETH” as a derivative of staked ETH on the platform, letting stakers effectively trade ETH while it is still locked up, with the promise of redeemability at a later date.

Next stop Shanghai — Ethereum’s latest milestone approaches

The Ethereum ecosystem is edging closer to its latest milestone as the Shanghai upgrade draws near.

The Ethereum ecosystem will continue its ongoing metamorphosis as the highly anticipated Shanghai upgrade draws near. The latest preeminent smart contract blockchain protocol improvement will activate Ether (ETH) withdrawals from Ethereum’s Beacon Chain.

The Merge marked a significant milestone for the Ethereum network in 2022, with the blockchain platform shifting from proof-of-work to proof-of-stake consensus. That change introduced validators as the new “miners” of the network, with staking ETH becoming a key component in maintaining the network.

While full validators were required to stake 32 ETH to process transactions and add new blocks to the network, the broader ecosystem could stake smaller amounts of ETH to earn a share of rewards — much like an investor that puts capital into interest-bearing accounts.

Those that locked up ETH to become validators have been unable to withdraw their staked holdings from the Beacon Chain. This changes with the Shanghai upgrade, and is a major reason for the increased fanfare around the latest change to the Ethereum network.

The Shanghai upgrade features a handful of Ethereum Improvement Proposals (EIPs) in addition to activating staking withdrawals. Cointelegraph reached out to members of the ConsenSys team, the Ethereum Foundation and analytics firm Nansen to unpack all aspects of the upcoming milestone.

Capella x Shanghai = Shapella

The upcoming changes feature two simultaneous upgrades amalgamated to encompass all facets of the upgrade.

Shanghai refers to changes to Ethereum’s execution layer, mainly enabling staked ETH to be deposited to execution layer wallets. The Shanghai upgrade requires a simultaneous change to the Beacon Chain, which has been dubbed Capella.

Justin Florentine, a staff protocol engineer for ConsenSys’ Hyperledger-Besu, further explained the combined upgrades at the execution and consensus layers:

“It is doubly named because it is the first simultaneous upgrade of Ethereum’s execution layer and consensus layer, and is highly anticipated because it will enable staked ETH withdrawals.”

Within the Ethereum ecosystem, execution layer upgrades are named after cities that have hosted Devcon events, while consensus layer upgrades are named after stars. Therefore the upcoming upgrade’s technical name is Shapella, combining Shanghai and Capella.

Nevertheless, given the focus on activating staked ETH withdrawals, the wider cryptocurrency ecosystem refers to the looming upgrade as Shanghai. As Beiko explained, Shanghai closes an important chapter in Ethereum’s evolution:

“It’s better to think of Shanghai as ‘finishing the Merge’ than related to future upgrades. We didn’t introduce withdrawals during the Merge because that upgrade was already the most complex in Ethereum’s history.”

Shanghai in a nutshell

As has been highlighted by several analysts and Ethereum developers, Shanghai features five EIPs. EIP-4895 will enable users to withdraw from the Ethereum staking contract, which had previously been locked.

Reward payments will be sent automatically to withdrawal addresses at regular intervals to validators. Users also have the option to exit staking entirely, which will return their entire validator balance.

Validator balances are maxed out at 32 ETH, meaning that balances above this threshold as a result of rewards do not contribute to the principal amount nor increase the weight of a validator on the network.

EIP-3651, EIP-3855, EIP-3860 and EIP-6049 are the other four elements of the network upgrade. Matt Nelson, ConsenSys Hyperledger Besu and Web3 senior product manager, highlighted the impact of each of these EIPs.

The Ethereum protocol prices gas based on how many units of work a function will require of a computer in the network. Changes to Ethereum’s gas costs often adjust to correct overpriced or underpriced operations that have central processing units doing more or less work than anticipated. Warm coinbase (3651), PUSH0 (3855) and the initcode changes (3860) are part of these corrections, according to Nelson.

EIP-3651 changes the price of accessing the coinbase address of a validator that submits and executes transactions. Validators receive fees to their coinbase address for maintaining the network. As Nelson summarized, EIP-3651 looks to lower the gas cost of accessing a coinbase address so that users that submit transactions can pay the validators directly in specific conditions:

“Regardless, this EIP corrects a previous oversight on the cost to access the coinbase address and gives some added benefits to users and developers that open up new use cases.”

EIP-3860 will have a similar effect. Developers submit initcode to the network when deploying a new smart contract. When the initcode is executed, a smart contract “bytecode” is created on-chain, running each time the contract is called, and also runs decentralized applications (DApps).

Metering initcode intends to correct the gas cost required for network nodes to process and deploy the smart contracts specified in the initcode. Validating nodes currently check that contracts are valid on deployment, which costs time and gas to complete, which the initcode EIP aims to improve as Nelson explained:

“EIP-3860 applies a new cost to the initcode that scales in correlation to the size of the ‘initcode’ to ensure handling that contract creation is costed appropriately.”

Lastly, EIP-3855 carries out a “straightforward and simple change” to the Ethereum Virtual Machine (EVM) and gas costing. The current state of the EVM does not store a value of zero on the execution stack cheaply, with developers having to use the “expensive” PUSH1 operation to set a value to zero.

Nelson highlighted that gas costs are directly linked to storage space in this instance, meaning the EVM only needs 1 byte to store a single zero, while more than 1 byte is required to store a bigger number from the PUSH1 operation:

“This change creates a new PUSH0 opcode, which is cost for 1 byte of data storage (less than PUSH1), and will bring gas costs for developers (and ultimately users) down.”

Beiko also reiterated that Ethereum Virtual Machine object format EIPs initially included in the Shanghai upgrade have been removed from the event.

What to expect

The effect of the Shanghai upgrade on cryptocurrency markets and the value of ETH is another pertinent question that is perhaps more difficult to answer.

Andrew Thurman, an analyst at blockchain analytics platform Nansen, told Cointelegraph that the upgrade would have significant ramifications for supply flows and price of ETH, given that staking creates fundamental changes to Ethereum’s market structure:

“Some believe that a successful network upgrade will spur more deposits, which would lead to bullish market activity. Others, meanwhile, believe that large portions of the staked ETH supply — now in excess of 17.5 million ETH — will be withdrawn and sold.”

Simon Dudley, a ConsenSys senior blockchain protocol engineer, summed up a shift in focus for the Shanghai upgrade to prioritize validator withdrawals. This meant that the implementation of certain EIPs was shifted further down the timeline to limit risks of further delays to the upcoming upgrade: 

“For this reason, there was a strong desire among the core developers to prevent the Shanghai upgrade from becoming overly complicated.”

Several of these EIPs have been pushed back to the Cancun upgrade, which will follow Shanghai later in 2023. This includes improvements that will lay the foundation for sharding, namely “Proto-Danksharding” EIP-4844.

Dudley noted that Shanghai intentionally excluded foundational sharding work, but work on EIP-4844 has continued in parallel. He also concedes that the deployment of Shanghai may well influence the ongoing work on sharding in the months to come:

“Shipping the Shanghai upgrade may have an impact on sharding because it frees up developers who were working on Shanghai to focus on the more complicated series of sharding upgrades, known as ‘The Surge.‘”

The Shanghai upgrade is scheduled to take place on the Ethereum mainnet in early April. The original date was pushed out from March 2023, with the Goerli test network — which allows for development testing before mainnet deployments — carrying out the Shapella upgrade on March 14.

Solana plans to improve its blockchain: Here’s how

After a network-wide slowdown left users frantic, Solana released plans to improve its latest network upgrade.

The Solana network experienced a noticeable slowdown in block production after its most recent 1.14 network update on Feb. 25. In an immediate response to transaction disruptions, validators downgraded the software to up performance levels.

However, on Feb. 28, Anatoly Yakovenko, the founder and CEO of Solana Labs, released another statement about how the ecosystem plans to improve its recent network upgrades. The major focus of the plan is on stability as the network continues its transition. 

The statement laid out a six-step plan for engineers to help streamline the process and revealed that an adversarial team had been formed, which comprises one-third of the Solana engineering team.

This team was formed to build additional hooks and instrumentation into the validator code and target exploits throughout the underlying protocols.

Additionally, it laid out ways to focus on creating network-wide stability. This includes a second validator client built by Jump Crypto’s firedancer team and Mango DAO developers building new tooling and implementing local fee markets — among other efforts.

Related: The state of Solana: Will the layer-1 protocol rise again in 2023?

Yakovenko’s recent statement also mentioned that an investigation of what happened in the initial outage is still being conducted, with the community to be informed when information is available.

On Feb. 28, he clarified that on-chain voting was not the cause of the slowdown. 

The community response to the outage was one of frenzy, with some users calling the system a “transaction killer.” However, the response to Yakovenko’s improvement roadmap was mixed, with some users saying the news was “great to hear,” while others still questioned Solana’s integrity:

The Solana ecosystem call is planned for March 2, 2023, in which it intends to discuss the state of the ecosystem, among other issues.

Later in the month, on March 27, Helium Network’s communications protocol plans to migrate to the Solana blockchain to deploy oracles.

Ethereum testnet successfully forks in Shanghai upgrade rehearsal

As Ethereum’s Shanghai upgrade approaches next month, the network’s Sepolia testnet has successfully upgraded, simulating the scheduled hard fork.

The Ethereum blockchain’s Sepolia testnet has undergone a successful upgrade that simulates the upcoming Shanghai hard fork expected to take place on mainnet in March.

The “Shapella” upgrade, which combines the names of the upcoming Shanghai and Capella hard forks, was successfully implemented on the testnet on Feb. 28.

Shanghai is the fork’s name on the execution layer client side and Capella is the upgrade name on the consensus layer client side. One of the major changes enables validators to withdraw their staked Ether (stETH) from the Beacon Chain back to the execution layer.

Related: Lido Finance activates staking rate limit after more than 150,000 ETH staked

Validators needed to stake 32 Ether (ETH) to validate on the Ethereum blockchain. They will now be able to withdraw rewards in excess of 32 ETH and be permitted to keep validating while those who wish to fully withdraw can take all 32 ETH plus rewards and cease validating.

The next step before the Shanghai fork goes live on the mainnet will be to release the upgrade on the Ethereum Goerli testnet, which is expected to commence in March.

Ethereum’s Shapella transition is “on the horizon”

The milestone is another step on the road to the Shanghai upgrade, which remains scheduled for March.

The Ethereum Foundation team announced another milestone on the road to the Shanghai upgrade, with the Shapella fork on the Zhejiang testnet moving into the final pre-launch sequence, according to a blog post on Feb 10.

The Shapella transition includes “many features,” and “most importantly to stakers and the consensus-layer, is the enabling of withdrawals,” notes the post, adding that:

“Full withdrawals will be available for exited validators, whereas partial withdrawals will be available for active validator balances in excess of 32 ETH.” 

As per the announcement, validators to participate in withdrawals must have a 0x01 execution-layer withdrawal credential. “If a validator currently has a 0x00 BLS withdrawal credential, they must sign a change operation to 0x01 to enable withdrawals,” notes the Ethereum team. 

Shapella refers to two Ethereum’ upgrades — “Shanghai” and “Capella” — allowing withdrawals on the execution layer, as well as the enhancement of the Beacon chain consensus layer. The move is especially helpful for ETH (ETH) stakers interested in understanding how withdrawals will work, since full withdrawals on the consensus layer require interaction.

Related: Ethereum’s Shanghai fork is coming — but it doesn’t mean investors should dump ETH

The Zhejiang test network, which launched on Feb. 1, is the first of three testnets that simulate Shanghai, which is expected to be live in March, although a specific date has not been released. The Sepolia testnet is scheduled to go through the upgrade on Feb. 28, followed by the Goerli testnet. The Ethereum team noted:

“If you are an Ethereum staker, node operator, infrastructure provider, or otherwise, now is the time to get up to speed on the coming Shapella upgrade, test your software, and pay attention. From here, each public testnet will be upgraded, and if all goes according to plan, mainnet will soon follow.”

Ethereum’s roadmap has several updates coming after Shanghai, known as the “Surge,” “Verge,” “Purge” and “Splurge”. Ethereum switched to proof-of-stake (PoS) consensus in September 2022, following by the United States Securities and Exchange Commission (SEC) Chairman Gary Gensler suggested that the blockchain’s transition to PoS might have brought ETH under the regulators’ radar.

Recently, Ethereum co-founder and crypto entrepreneur Joseph Lubin claimed to be confident that Ether won’t be classified as a security in the United States. “I think it’s as likely, and would have the same impact, as if Uber was made illegal,” Lubin said.

Ethereum’s Shapella transition is “on the horizon”

The milestone is another step on the road to the Shanghai upgrade, which remains scheduled for March.

The Ethereum Foundation team announced another milestone on the road to the Shanghai upgrade, with the Shapella fork on the Zhejiang testnet moving into the final pre-launch sequence, according to a blog post on Feb 10.

The Shapella transition includes “many features,” and “most importantly to stakers and the consensus-layer, is the enabling of withdrawals,” notes the post, adding that:

“Full withdrawals will be available for exited validators, whereas partial withdrawals will be available for active validator balances in excess of 32 ETH.“ 

As per the announcement, validators must have a 0x01 execution-layer withdrawal credential to participate in withdrawals. “If a validator currently has a 0x00 BLS withdrawal credential, they must sign a change operation to 0x01 to enable withdrawals,” notes the Ethereum team. 

Shapella refers to two Ethereum upgrades — “Shanghai” and “Capella” — allowing withdrawals on the execution layer and enhancing the Beacon Chain consensus layer. The move is especially helpful for ETH (ETH) stakers interested in understanding how withdrawals will work since full withdrawals on the consensus layer require interaction.

Related: Ethereum’s Shanghai fork is coming — but it doesn’t mean investors should dump ETH

The Zhejiang test network, launched on Feb. 1, is the first of three testnets that simulate Shanghai, which is expected to be live in March, although a specific date has not been released. The Sepolia testnet is scheduled to go through the upgrade on Feb. 28, followed by the Goerli testnet. The Ethereum team noted:

“If you are an Ethereum staker, node operator, infrastructure provider, or otherwise, now is the time to get up to speed on the coming Shapella upgrade, test your software, and pay attention. From here, each public testnet will be upgraded, and if all goes according to plan, mainnet will soon follow.“

Ethereum’s roadmap has several updates coming after Shanghai, known as the “Surge,” “Verge,” “Purge” and “Splurge.” Ethereum switched to proof-of-stake (PoS) consensus in September 2022, after which the United States Securities and Exchange Commission Chairman Gary Gensler suggested that the blockchain’s transition to PoS might have brought ETH under the regulators’ radar.

Recently, Ethereum co-founder and crypto entrepreneur Joseph Lubin claimed to be confident that Ether won’t be classified as a security in the United States. “I think it’s as likely, and would have the same impact, as if Uber was made illegal,” Lubin said.

Ethereum devs create ‘shadow fork’ to test conditions for Ether withdrawals

Developers are attempting to attack the forked testnet with malicious nodes to see if they can find vulnerabilities.

As the proposed date for the Ethereum Shanghai update draws closer, developers have created a testing environment called a “shadow fork,” according to a Jan. 23 tweet thread by Go-Ethereum developer Marius Van Der Wijden. The new testnet appears to have been created in order to test the conditions needed for Ether (ETH) staking withdrawals, which are currently disabled but are intended to become enabled in the update.

The name of the testnet is “Withdrawal-Mainnet-Shadow-Fork-1.” According to Web3 node provider Alchemy, a “shadow fork” is a fork of the mainnet that is intended to be used only for testing purposes.

Van Der Wijden stated that he and another developer named “Potuz” will create malicious nodes that will send bad blocks and messages to other nodes on the testnet and try to convince them to join a false version of the network. For now, the network is running smoothly, but Van Der Wijden has stated that he wants to “see if Potuz and I can break it.” This is apparently being done to see if the upgrade can prevent malicious attacks or if further changes need to be made before it is implemented on mainnet.

Related: Metamask provides liquid staking solutions from Lido and Rocket Pool

The launch of this testnet comes after devs have expressed an increasing urgency to make Ether staking withdrawals a reality. On Jan. 6, they held a meeting during which they agreed to exclude the proposed EVM Object Format (EOF) from the Shanghai upgrade. EOF was intended to make Ethereum easier to upgrade in the future. But because of its complexity, the devs decided to leave it out of Shanghai for fear that it would delay withdrawal implementation.

Over 14.5 million ETH (over $23 billion worth, at time of writing) has been deposited into the Ethereum staking contract and cannot currently be withdrawn, according to a December report by Nansen. In November,  Ethereum devs came under harsh criticism for allegedly moving the goalpost in regards to enabling withdrawals.

The Shanghai upgrade is currently scheduled to be implemented sometime in March.

Rewind 2022: A crypto roundup of the year and stepping into 2023

While 2022 proved catastrophic for investors across traditional and crypto markets, the crypto ecosystem’s potential has shined through the cracks of inflation and centralized custody of assets.

Stepping into the year 2023, it’s time to pause and reflect on the accomplishments and struggles the global crypto community witnessed over the last 365 days. Starting from the very beginning of 2022, no investment strategy could help recover the falling portfolios across traditional and crypto ecosystems. January 2022 inherited a slightly collapsing market, wherein investments made on 2021 all-time high prices resulted in immediate losses. 

For many, especially the new entrants, falling crypto prices were perceived as an end game. But what went widely unnoticed was the community’s resilience and accomplishments against a global recession, orchestrated attacks and scams and an unforgiving bear market.

As a result of falling prices, 2022 also inherited the 2021 hype around nonfungible tokens (NFTs), the Metaverse, iconic all-time highs for Bitcoin (BTC) and other cryptocurrencies.

Economies worldwide suffered massive inflation as the most influential fiat currencies succumbed to the ongoing geopolitical pressures. The fall of investor confidence in traditional markets seeped into crypto and the fall of ecosystems only aided the sour sentiments.

A year full of disruption

Amid poor market performance, the crypto community focused on strengthening its core. This meant releasing blockchain upgrades and introducing faster, cheaper and more secure features and capabilities — all driven by the consensus of the respective communities. As a result, 2022 was a milestone year for leading crypto ecosystems.

Bitcoin received a highly requested improvement for its layer-2 protocol Lightning Network (LN) protocol. The LN got improved privacy and efficiency thanks to a November 2021 upgrade called Taproot. Bitcoin’s Taproot upgrade saw various protocol-level implementations for improved privacy and efficiency. It also helped lower the database sizes, an essential factor in slowing down the exploding Bitcoin ledger size.

By May 2022, Bitcoin was already halfway to the next halving, an event that reduces the mining rewards by half, the only way new Bitcoin gets released into supply. The reward for confirming Bitcoin transactions gets slashed by half every 210,00 blocks. The last Bitcoin halving event occurred on May 11, 2020, back when it traded at the $9,200 mark.

The total supply of Bitcoin is limited to 21 million by design. Therefore, a halving event further reduces the amount of Bitcoin that gets released into the market. A resultant scarcity due to the halving event historical worked in favor of Bitcoin price.

Adhering to the expectations of industry experts, Bitcoin rallied for several months to mark its all-time high by Nov 2021 and was able to retain its value well above $15,000 until the end of 2022, confirms data from Cointelegraph Markets Pro.

Bitcoin price during the last halving event. Source: CoinMarketCap

The Ethereum community welcomed the highly anticipated Merge upgrade, which saw the Ethereum blockchain’s transition from proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. The upgrade’s most significant impact was a drastic energy consumption reduction. The wider crypto community counts on this lower energy usage to reignite the interest in Ether-power sub-ecosystems, such as NFTs.

Crypto resilience vs. traditional markets

History proves that two factors play a crucial role in crypto market performance — the price of Bitcoin and investor sentiment. Both factors seemed to lack throughout the year.

Crypto events timeline against market capitalization. Source: CoinGecko

The crypto ecosystem was plagued with a series of attacks, unprecedented sanctions and bankruptcy filings, which multiplied the impact of the global recession on the market. In addition to poor price performance, some of the most prominent scars for 2022 investors include the fall of FTX, 3AC, Voyager, BlockFi and Terraform Labs, wherein investors lost access to all their funds overnight.

Amid this commotion, entrepreneurs once loved by the masses ended up breaking the trust of millions, namely former FTX CEO Sam Bankman-Fried and Terra co-founder and CEO Do Kwon.

Despite the added hurdles, the Bitcoin and crypto ecosystem not only survived but also displayed a never-seen-before resilience. Traditional store-of-value investments such as gold and stocks too suffered a similar fate. Between January-December 2022, gold investors realized a net loss of 0.3%.

Major company stocks also performed poorly this year, which includes Apple (-25%), Microsoft (-29%), Google (-38%), Amazon (-49%), Netflix (-51%), Meta (-65%) and Tesla (-65%).

Yearly performance of traditional market goliaths. Source: LinkedIn

Bitcoin started strong with a $47,680 price point in Jan. 2022, but dwindling investor sentiment — driven by year-long rising inflation, energy prices and market uncertainties — managed to bring the prices down by over 60% by December.

Setting the stage for a stronger foundation

Time after time, bear markets have taken the responsibility of weeding out bad actors and offering a chance for promising crypto projects to display their true value to investors beyond the price point.

The noise around price fluctuations could not stop the Bitcoin network from strengthening its core against double-spending attempts, i.e., 51% attacks. Thanks to the widespread mining community, hash rate and network difficulty — two important computational power-based security metrics — reassured Bitcoiners that the blockchain network was well-protected. Throughout the year, the Bitcoin network consistently recorded new hash rate all-time highs and ended the year between the 250-300 Exahashes per second (EH/s) range.

Click “Collect” below the illustration at the top of the page or follow this link.

Other prominent players in the crypto ecosystem also released the system and feature upgrades as they gear up for 2023. For Polygon Technology, an Ethereum-based Web3 infrastructure, it was the launch of zkEVM or zero-knowledge Ethereum Virtual Machine, a layer-2 scaling solution aimed at reducing transaction costs and improving scalability. Decentralized finance (DeFi) aggregator 1inch Network launched the Fusion upgrade for delivering cost-efficient, secure and profitable swaps for crypto investors.

El Salvador’s legalization of Bitcoin did not go unnoticed, especially considering that the country’s Bitcoin procurement from 2021 shared the same fate as other crypto investors. Regardless, El Salvador President Nayib Bukele doubled down on this decision as the country announced purchasing BTC on a daily basis from Nov.17.

One of the immediate impacts of this move is a reduction in El Salvador’s average buying price. A planned purchase of Bitcoin dips combined with a subsequent market recovery makes the country well-positioned to offset the unrealized losses.

In countries with high inflation, Bitcoin helped numerous individuals retain their purchasing power.

Expect a return of the hype

While 2023 will not be fortunate enough to witness the upcoming Bitcoin halving, it will play a crucial role in the crypto ecosystem’s comeback. With aggressive blockchain upgrades, updated business strategies and investors’ attentiveness back on the menu, the ecosystem is now gearing up for the next wave of disruption.

For investors, 2023 will be a year of recovery — from losses and mistrust to self-custody and informed investments. “Making it” in crypto is no longer just about becoming an overnight millionaire; it is about creating, supporting and preaching a fresh take on the future of money.

1inch launches Fusion upgrade to improve swap security and profitability

As a decentralized trading and matching system, the 1inch Swap Engine connects DeFi users and provides liquidity for crypto trades through professional market makers.

Leading decentralized finance (DeFi) aggregator 1inch Network announced a major upgrade — Fusion — around its 1inch Swap Engine. The Fusion upgrade aims to deliver cost-efficient, secure and profitable swaps for crypto investors. 

The Fusion mode in 1inch Swap Engine allows DeFi investors to place orders with a predecided price and time range without paying network fees. In addition, the upgrade includes network improvements such as updated staking contracts and tokenomics.

As a decentralized trading and matching system, the 1inch Swap Engine connects DeFi users and provides liquidity for crypto trades through professional market makers. Explaining the intent behind the Fusion upgrade, 1inch Network co-founder Sergej Kunz stated:

“Fusion makes swaps on 1inch dramatically more cost-efficient, as users won’t have to pay network fees, plus, an extra layer of security is added, protecting users from sandwich attacks.”

Going against the traditional centralized approach, 1inch’s latest upgrade allows investors to perform secure noncustodial swaps, which are executed in a totally permissionless and trustless way.

According to the announcement, 1inch offers limitless liquidity and uses a new type of decentralized order-matching approach based on the Dutch auction model, as shown below.

The Fusion mode allows users to exchange tokens on various decentralized exchanges (DEXs) without paying any network fees. The upgrade also allows users to choose the order execution time as per their unique requirements.

Moreover, the Fusion mode provides protection against the maximum extractable value (MEV), which refers to the maximum value that can be extracted from block production in excess of the standard block reward and gas fees.

Alongside the upgrade, 1inch launched the 1inch Resolver Incentive Program, which will help resolvers get a refund on the gas spent on filling users’ orders in Fusion mode until Dec. 31, 2022.

Related: 1inch releases new tool to protect traders against ‘sandwich attacks’

Security experts believe that bridge attacks will still pose a major challenge for the DeFi sector in 2023.

Speaking to Cointelegraph, Theo Gauthier, founder and CEO of Toposware, pointed out that bridges have an “inherent vulnerability” because they rely on the security of the chains it connects to.

In this regard, one of the major technologies available is zero-knowledge proofs (ZKPs), which allow data to be verified and proven as accurate without revealing further information.